Lunn: It should be the market that determines the pace of development

Sep 12, 2007 9:41:00 PM MST
Federal energy minister tells pipeline group plans to reduce regulatory process on track (Pipeline-Regulatory-L)

CALGARY (CP) _ Plans to reduce the regulatory process for major pipeline projects in the future are on track Federal Natural Resources Minister Gary Lunn said Wednesday evening but won‘t be any help to the $16.2 billion Mackenzie Gas pipeline.

The Harper government put aside $150 million over five years in the last federal budget to set up a new Major Projects Management Office to help streamline the regulatory process.

“I look at what we put many of these companies through, just at the federal level, multiple layers whether it be DFO, Environment Canada, Industry Canada, Natural Resources. Quite often you‘re forced to go through multiple approval processes,‘‘ said Lunn in a speech to the Canadian Energy Pipeline Association in Calgary. “It can literally take years and create uncertainty.‘‘

“If you know that your regulatory approval process will take six months or it will take a year and make a decision. You can put it in your business plan as you‘re trying to attract literally tens of billions of dollars in capital investment,‘‘ Lunn added.

The new office will be up and running “within months‘‘ but it will be of no assistance to those hoping to build a pipeline to carry natural gas from the Mackenzie Delta the minister acknowledged.

“It‘s too late obviously. They‘re already waiting for decisions,‘‘ said Lunn in an interview with the Canadian Press. “We realized early on in our mandate that there was an opportunity to make some gains here and the Mackenzie pipeline is no exception to that but it is already well on its way.‘‘

The head of ExxonMobil Corp. told reporters last week that the project still remains very much a part of the plans of Imperial Oil (TSX:IMO) but that the regulatory process would still take another year.

After the results are known, CEO Rex Tillerson said the company would assess the “economic viability‘‘ of the 1,200 km pipeline.

He had indicated in May that ExxonMobil would shelve the long-delayed pipeline project if Canadian taxpayers don‘t foot some of the bill. He said the pipeline wouldn‘t be viable without a “sizable chunk‘‘ of federal aid.

“It would be premature for me to speak on that. Obviously the project at the end of the day has to be commercially viable,‘‘ said Lunn. “I think it‘s in our national interest to see that move forward. It‘s a great project and would open up the gas in the far north and you‘ll see more development.‘‘

“It‘s been a long process going through the regulatory approval. It‘s just one example where we have to do a better job as a government and that‘s what this Major Project Management Office is all about,‘‘ he said.

The minister said as a whole pipeline companies are planning to double their collective assets over the next 15 years to bring more oil and gas to the market and all possible hurdles need to be removed.

“It can‘t just be about people. It has to be about process and streamlining the current processes so that when you go in with your regulatory approvals you will know you are dealing with one office,‘‘ Lunn explained. “We can cut those approval times in half without compromising the approval of those processes.‘‘

Lunn scoffed at suggestions that the current rate of expansion with pipelines and in developing northern Alberta‘s oilsands should be curtailed. He said the market is red hot right now and it should be the market that determines the pace of development.

“The people who say we shouldn‘t allow that to happen - in many cases those are the ones that have the newest technology and those will be some of the cleanest projects going. And at the same time it‘s important we allow economic growth as a foundation to our economy.‘‘
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